U.S. District Judge Jon Tigar refused to toss antitrust claims against American Surety Company and its president, CEO and co-owner William Carmichael, despite dismissing nearly all similar claims against 28 bail industry players with leave to amend. American Surety Company and its CEO are both accused of being “ring leaders” in a conspiracy to discourage rival bail bonds companies from offering rebates and to fix premiums–the percentage of profits forfeited to bail bonds companies.
The federal antitrust class action, filed in 2019, alleges 28 bail industry players–including two bail agencies, trade associations, and surety companies who underwrite bail bonds–conspired to submit uniform premium rates of 10% to the California Department of Insurance and concealed bail agents’ power to offer rebates by suggesting on their websites that rebating is wrong, unavailable or illegal.
Between 2014 to 2018, every surety company set premium rates at 10% in California and only two dropped their rates to 9% in 2018, which supports allegations of “uniform rates” and “parallel conduct” — two essential elements of an antitrust claim — in the California bail industry, Tigar held.
However, despite this finding, Judge Tigar still dismissed claims against most defendants, finding a second amended complaint didn’t adequately allege that bail agencies struck an anticompetitive agreement to fix prices.
According to the lawsuit, the conspiracy with ASC started in 2004 after the state Superior Court ruled that bail agents could legally offer rebates on standard premium rates approved by the state’s Department of Insurance.
Bond purchasers allege that American Surety Company “sprung into action” after that decision, telling rivals it would not lower its 10% premium rates or offer rebates. ASC also discouraged its agents from offering or advertising rebates and urged its rivals to do the same, according to the complaint.
Judge Tigar dismissed similar claims against Jerry Watson, who worked for American Bail Coalition Inc. and AIA Surety, citing that similar statements by Watson were more open-ended, “unlike Carmichael’s statements, which can be construed as invitations to conspire.”
The judge also dismissed claims against the California Bail Agents Association, Golden State Bail Agents Association and American Bail Coalition, finding the complaint did not allege these companies entered into an agreement with others to fix premium rates or suppress rebates.
Tigar dismissed the claims with leave to amend. An amended complaint must be filed by Feb. 4.
Curious about CEB? Please visit our website to learn more about our products, our free webinars and guidebooks, and our public service mission.